Fitbit Stock: The Simple Reason to Be Bullish on Fitbit Inc

By Jeff Russell, B. Comm., MA Published : March 10, 2016

It’s been a brutal year for Fitbit Inc (NASDAQ:FIT) stock, as shares have sunk nearly 56% since the start of the year. FIT stock is clearly out of favor with investors, but Fitbit’s market for its wearable products is still growing. That means there might be a chance for a rebound in Fitbit stock, but what will be the catalyst?

When Fitbit unveiled its first-ever smartwatch, the “Fitbit Blaze,” at the Consumer Electronics Show back in January, investors were underwhelmed with its lack of standout features. Investors were expecting a watch to rival Apple Inc.’s (NASDAQ:AAPL) watch; instead, they perceived the watch as a fitness tracker with a screen. After the unveiling, FIT stock dropped 18% in the following days.

However, at least one analyst thinks the Blaze will drive Fitbit stock back up. Dougherty & Co analyst, Charles Anderson said that so far, the Blaze appears to be exceeding expectations.

“We have consistently said that Fitbit is likely to trade in sympathy with how well its new products are received by the market. While it is early, we can say with confidence that the Fitbit Blaze looks to be exceeding expectations out of the gate,” Anderson said. “Thus, we would not be surprised to see the stock outperform in the near-term.” (Source: “Fitbit’s (FIT) Blaze Exceeding Expectations – Dougherty & Co,” StreetInsider.com, March 8, 2016.)

A quick look on Amazon.com, Inc. (NASDAQ:AMZN) reveals that the Blaze is the number-one-selling smartwatch, with 87% of the 654 reviews giving the watch a four- or five-star rating. In comparison, the “Fitbit Charge HR” had substantially fewer reviews in the first nine days on the site, and only 47% of the reviews rated the watch four or five stars, Anderson noted. (Source: Ibid.)

Fitbit also indicated in its latest earnings release that pre-order sales of the Blaze were exceeding the company’s forecasts.

The Blaze is successful so far because it’s more than just the fitness tracker investors thought it was. The watch has an impressive five-day battery life, text message notifications, the ability to play music, onscreen workouts, and it can even automatically recognize what physical activity you are doing. And it’s not too expensive, with a price tag of $199.99.

The Bottom Line on Fitbit Stock

Given the early positive reviews, modest price, and new features, the Fitbit blaze should be a boon for FIT stock. Investors may want to take a closer look at Fitbit stock.